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Treasury hammering out final cyclone pool details

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A consultation process is settling the final details for a cyclone reinsurance pool that is on track to take effect next July, Assistant Treasurer Michael Sukkar says.

Mr Sukkar says the Treasury-led process has “landed on a model” that is sustainable and that will deliver significant premium reductions as discussions with key stakeholders continue on a number of decisions.

A Federal election is due to be held by May, but Mr Sukkar says he is focused on making sure, regardless of the election timetable, that the pool will be “in the shape it needs to be” to reduce premiums for decades to come.

“It was always a very ambitious timeframe but my very strong view was that the issue was so acute that it needed to be fast-tracked,” he told the Insurance Council of Australia forum last week. “We have done that, and we will seek to introduce a bill establishing the pool early next year for commencement on 1 July.”

The reinsurance pool, backed by a $10 billion Government guarantee, was announced by Prime Minister Scott Morrison during a trip to northern Queensland ahead of the May budget. Increased spending on mitigation and resilience measures was also included in the budget.

The Northern Australia Insurance Lobby (NAIL) has raised concerns over whether the final design will provide relief for holiday destination properties under arrangements such as “accommodation module” strata.

The policyholder representative group is also concerned cover for businesses may be too restrictive, that marine businesses may miss out and has pointed out that the actual saving generated by the pool will be a key test of it its success.

“We have market failure and it has to be properly addressed,” NAIL Co-Chairman Margaret Shaw said.